Hydro power in India is growing at the slowest pace
In the late 2000s, hydroelectric power was billed as a sustainable, renewable alternative to coal and gasbased electricity for India. The government drew up ambitious plans for setting up hydel plants and the private sector was keen to get in on the action. In 2008, growth in India’s installed hydel capacity outpaced the rise in India’s total power capacity. But it has been a different story since. Hydropower has slowly faded from the discourse on the future of India’s energy security, as solar and wind projects garner much of the attention.
India’s installed hydro capacity at the end of 2018 was around 45,400 MW, an annual growth of just 1%, the lowest since 2009. What’s more, between 2008 and 2018, hydel power’s share of India’s total installed electricity capacity has halved from 25% to 13%. (In the same period, thermal power’s contribution has remained the same, at two-thirds, and that of renewables has more than doubled to a fifth.)
Beset by land acquisition troubles, uncertainty over final costs as well as estimated time for completion, and low tariffs, the hydel sector is unlikely to have a turnaround in the near future.
While hydropower is renewable, its social and environmental impact from displacement of thousands of people and adverse effects on biodiversity as a result of dams, to methane emissions from the rotting vegetation in their reservoirs means that big hydel projects are no longer hyphenated with solar, wind and biomass energy.
In 2015, the Indian government stopped categorising hydel projects larger than 25 MW as renewable.
India has 4,500 MW of hydel projects with a capacity of less than 25 MW each. The govt has estimated the country’s hydropower potential (more than 25 MW) at over 1,45,000 MW.
Mr Balraj Joshi, chairman and managing director of the Union government-owned NHPC Limited, said that hydel power is put on a par with other sources of power without monetising its advantages like its ability to meet peak demand and to balance supply to the grid. Building a hydel plant can cost INR 7-9 crore per MW, compared with INR 4.5-5 crore/MW for thermal power and INR 3.5-4 crore/MW for solar energy. Hydel projects can also take around eight years to be completed, twice as long as thermal projects; solar plants can be up and running in 1.5-2 years.
Thanks to geological and hydrological surprises, time and cost overruns are not uncommon for hydro projects. So banks are wary of lending to such projects. Mr Vinayak Chatterjee, chairman, Feedback Infra, a consultancy said that “Banks are not comfortable lending for more than seven years so hydel projects need other sources like pension funds and (alternative) asset management companies.”
This makes it tough, initially, for hydel power developers to compete with thermal and renewable power producers on tariff. But once a hydel project is completed, power becomes cheaper over time; and the lifespan of hydel plants runs into decades.
Source : Economic Times